LSI Industries (LYTS) Breaking Out After Beating EPS Estimate With Improving Margins

Shares of LSI Industries (LYTS) are breaking out of a downtrend today after the company beat analyst estimates on the EPS side, while missing the revenue estimate.  Traders are focusing on the sizable EPS beat with the stock up nearly 10% today.  The company posted an EPS of .09/share (vs the estimate for .02/share) on revenues of $64.63 million (missing  the analyst estimate for $70 million.  The EPS number is a big improvement over the year ago quarter when the company posted a .09/share loss.  CEO Robert Ready attributed the reversal to big improvements in manufacturing efficiency.  He also commented on the future..

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"Business is solid and is gaining momentum as we move into the fourth quarter. Assuming the general economy continues to grow, we are well-positioned to achieve substantially higher sales and profits for both the fourth quarter and fiscal 2011. Effective April 1, we instituted a price increase on our products to offset generally increased costs of raw materials. Longer term, we continue to be very constructive on our position and the opportunities for LSI Industries’ continued growth.”

"In summary, fiscal 2011 is turning out to be a much improved year in terms of sales and profits. LSI Industries is very well-positioned for the future and we are optimistic that our many growth initiatives will produce the desired results. One final note, LSI Industries has paid regular cash dividends continuously since 1989, and we believe dividends are important to our shareholders. Management intends to recommend an increase in the regular annual indicated cash dividend rate to the Board of Directors after determination of the final fiscal 2011 year-end operating results.

Technically, today’s move in shares of LYTS is quite bullish with a firm move above both the 50 and 200 day moving averages.  An entry on a pull back closer to the 7.50 range would be ideal, but the stock may not offer that opportunity. 

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